Mortgage lenders are increasing rates on tracker mortgages ahead of a suspected fall in the Bank of England’s base rate.
The Monetary Policy Committee is due to meet on Thursday (14 July), with many advisers and providers predicting the first change in the base rate since March 2009.
Since then the rate has been held at 0.5 per cent, but a poll carried out by FTAdviser Advantage found 74 per cent predicted it to be changed to 0.25 per cent or 0 per cent, with only 10 per cent stating there would be no change this year.
In the wake of the UK’s vote to leave the EU, Bank of England governor Mark Carney stated monetary easing could take place over the summer and hinted at possible changes to the base rate.
As a result, several lenders have made changes to the rates available on mortgages that track the central bank’s interest rate.
Scottish Widows Bank’s two-year tracker rates increased by 0.35 per cent on Tuesday (12 July).
On Monday (11 July), Santander’s variable track rates for two-years of 1.39 per cent increased by 0.2 per cent, while the 1.59 per cent rate increased by 0.15 per cent.
On Friday (8 July), Halifax’s variable two-year trackers at 1.29, 1.34, 1.49, 1.54, 1.69, 1.74, 1.84, 2.24, 2.39 and 2.49 per cent all increased by 0.2 per cent.
Also at the end of last week, Coventry Building Society pushed up two-year variable trackers at 1.59 per cent by 0.26 per cent, at 1.69 per cent (maximum 75 per cent loan-to-value) by 0.30 per cent, at 1.69 per cent (maximum 65 per cent LTV) by 0.36 per cent, and at 1.79 per cent increased by 0.40 per cent.
Moneyfacts analysis confirmed that since the start of June, a few lenders have increased tracker rates by as much as 0.4 per cent.
Moneyfacts’ spokeswoman Rachel Springall said while the majority of the mortgage market has had very few increases in recent weeks, there is a gradual change underway for tracker mortgages.
She said: “These slight changes are a sign of lenders weighing up their current range of variable deals in anticipation of a base rate cut. These changes have resulted in the average two-year tracker mortgage rising slightly from 2.01 to 2.03 per cent since the start of July. ”
Simon Checkley, director at brokers Private Finance, said it was fair to say this is an industry move in anticipation of a cut in the base rates, “bearing in mind lenders funding costs are generally higher than base, this is a defensive stance to preserve margins”.